Case study 5
Members: (Ma,Lei, Qing Lan Wang, Julie Anto, Neha Kulkarni, Narayanan Ravi)
* Rondot is a wholly owned subsidiary of Rondot Worldwide,a leading global designer and manufacturer of electrical and electronic components.Rondot Automotive operated 85 plants in 25 countries.
* The purchasing organization at Rondot automotive had a hybrid structure and the Jackson plant’s purchasing department consisted of four people, including two buyers, a planner (Glen) and Terry Gibson.
* Glen had been approached by an enterprise local supplier called Greven E-coating and they provided samples for each family of housings and cost estimates to Glenn.
* The technology used in the Greven E-coating is cost effective & uses newer technology.
* These samples were sent to Rondot’s quality control department for testing and the results seemed encouraging.
* Current situation:
* Rondot Automotive was facing considerable global competition and significant pressures from its customers for price reductions.
* Total sales and employment at the Jackson plant had steadily declined over the past five years.
* The number of employees at the plant had dropped from 1450 to 600 and plant management was under pressure to lower costs and regain market share.
* Glenn has the option to do outsourcing on cleaning and painting work to Greven E-Coating.
* Glenn needs to come up with an ideal recommendation on how to reduce the cost and propose that to Terry Gibson and Dick Taylor.
* Company to take a decision on insourcing or Outsourcing.
* Higher Costs related to cleaning and painting.
* Increased global competition and pressure from customers on price reduction.
* Lack of technology development to compete in the competition.
* Inexperienced planner for a big decision.
* Steady decline of total sales for the past five years.
* Cost benefits analysis on the process.